One Media iP Group PLC Half-year Report (8863S)

TIDMOMIP

RNS Number : 8863S

One Media iP Group PLC

19 July 2022

19 July 2022

One Media iP Group Plc

("One Media", the "Group" or the "Company")

Interim Results for the six months ended 30 April 2022

Strong first half performance with double digit revenue and earnings growth

One Media iP (AIM: OMIP), the digital media content provider which specialises in the active exploitation of music and video intellectual property rights together with copyright infringement technology, announces its unaudited interim results for the six months ending 30 April 2022.

Financial Highlights

-- 13% increase in revenue to GBP2.4m (H1 2021: GBP2.1m), driven by contribution from new acquisitions, organic growth and active management of portfolio

-- 39% uplift in EBITDA to GBP1.0m (H1 2021: GBP0.7m), notwithstanding addition of TCAT overhead expenses

   --      20% uplift in net revenue to GBP1.6m (H1 2021: GBP1.3m) 
   --      EPS up 24% to 0.19p (H1 2021: 0.15p) 
   --      Net margin increased to 67% (H1 2021: 63%) 
   --      Cash balances at 30 April 2022 of GBP2.1m (H1 2021: GBP6.4m) 
   --      Operative NAV per Ordinary Share of 17p* 
   --      Final dividend of 0.055p per share distributed in June 2022 

Operational Highlights

-- Acquisition of the licensor's share of the royalties to the Orbital Digital Ltd/Rapier Music catalogue of rights c omprising over 40 branded record labels and several thousand diversified recordings with proven revenue streams from artists including Joe Strummer, Chic, Kool & The Gang, Sid Vicious and the Irish Tenor Trio

-- TCAT business plan progressing, with software operating across 178 territories and trials with three major record labels expected to translate into long term contracts

Outlook

-- Ongoing supportive market backdrop with music industry growth projections continuing to accelerate and increasing opportunities to generate royalty income through digital platforms

-- Positive industry developments, including Copyright Royalty Board ruling in July 2022 increasing headline royalty rate in the US from 10.5% to 15.1%

Michael Infante, CEO said: "We are very pleased with the results delivered for the first half of this year, building on the positive progress we made in 2021. Our core strategic focus on diversified catalogues of songs that have proven their value over many years continues to deliver, with our specialist teams helping to maximise their revenue potential alongside our other investments. Against a strengthening industry backdrop, our expertise in driving royalty income from digital recordings and disciplined approach to acquisitions have enabled us to deliver significant growth that positions us well for the remainder of the year."

* Operative NAV is calculated by using the IFRS NAV, adjusting for the revaluation of catalogues assets to fair value and then adding back the catalogue amortisation.

This announcement contains inside information for the purposes of the UK Market Abuse Regulation. The person who arranged the release of this information is Michael Infante, Chief Executive Officer of the Company.

For further information, please contact:

 
 One Media IP Group Plc 
 Michael Infante                      Chief Executive 
                                       Tel: [phone] 
                                       5500 
 Claire Blunt                         Chairman 
                                       Tel: [phone] 
                                       5501 
 
 Cairn Financial Advisers LLP         Nominated Adviser 
 Liam Murray / Jo Turner / Ludovico   Tel: [phone] 
  Lazzaretti                           0880 
 
 Cenkos Securities plc                Broker 
 Max Gould/Giles Balleny Corporate    Tel: [phone] 
  Finance)                             8900 
  Michael Johnson (Sales) 
 
 Claire Turvey, Fourth Pillar         Financial PR 
                                       Tel: [phone] 
                                       198 
 

About One Media iP Group Plc

One Media is a digital music rights acquirer, publisher and distributor with a catalogue independently valued at GBP34.8 million (as at April 2022). The Group specialises in purchasing and monetising intellectual property rights with proven, repeat income streams. One Media adds value to its content by maximising its availability in over 600 digital stores globally, including Apple Music, YouTube, Amazon and Spotify.

One Media's music is also widely used for synchronisation in film and TV whilst its video content is primarily viewed on YouTube where One Media operates over 20 YouTube channels as a certified partner. Additionally its copyright infringement and digital music audit tool software TCAT is used by major record labels and the world leading digital international distributor. Men & Motors, the Company's branded car channel, is now available via YouTube www.youtube.com/channel/UCNLiybn_9jgQaV0NZlSRwCg

One Media is listed on the AIM Market of the London Stock Exchange under the ticker 'OMIP'.

For further information, please visit www.omip.co.uk and www.harmonyip.com/

Chairman's Statement

Financial performance

In the first half of 2022, the Company has continued to build on the momentum created during the prior year enabling the delivery of another set of positive results from our diversified portfolio of music and video intellectual property rights, which includes investments in Take That's 'A Million Love Songs'; Culture Club's 'Karma Chameleon'; as well as music performed by artists such as Kid Creole and the Coconuts, Joe Strummer, Sex Pistols, Kool & the Gang and Chic.

Revenues have increased by 13% to GBP2.4 million (H1 2021: GBP2.1 million), driven by contributions from new acquisitions, organic growth and active management of portfolio. EBITDA grew by an impressive 39% to GBP1.0 million (H1 2021: GBP0.7m), notwithstanding the new inclusion of TCAT overhead expenses in this period. As a result, Earnings Per Share increased by 24% to 0.19p.

A 20% uplift in net revenue was delivered and net margin was increased to 67% (H1 2021: 63%) reflecting the relatively low overall cost base and ongoing efforts of the specialist team to sweat the portfolio and maximise its income potential. The Operative NAV per Ordinary Share was 17p.

One Media trades in a global market and is therefore required to convert its digital income from the many territories' currencies in which it operates on a monthly basis. All of these local currencies are converted to US Dollars which are ultimately reported in Sterling. With approximately 89% of the Company's revenues generated in US dollars, management carefully monitors exchange rates to ensure the Company can seek to take advantage of the best exchange rates available. The average monthly rate for the first half of 2022 moved to 1.3325 from 1.3678 in the same period last year.

Following a positive performance in 2021, on 22 April 2022 the Company declared a final dividend of 0.055p per ordinary share which was distributed to shareholders in June 2022.

When we released our full year results in April, we also announced that our content catalogue had been independently valued at GBP34.8 million, which reflects an implied value of 16.1p per share and the fair value of the portfolio that has been carefully assembled over the last 16 years. With the results the Company has announced today, we are well positioned for the year ahead and continue to work hard on behalf of our shareholders to maintain our positive performance and deliver returns.

Operations and investments

During the period the Company acquired the licensor's share of the royalties to the Orbital Digital Ltd/Rapier Music catalogue of rights comprising over 40 branded record labels and several thousand diversified recordings with proven revenue streams from artists including Joe Strummer, Chic, Kool & The Gang, Sid Vicious and the Irish Tenor Trio. The investment is fully meeting performance expectations and brings further diversification and additional income to our portfolio at a multiple that is in line with our acquisition strategy.

The transaction was undertaken through One Media's Harmony IP asset release initiative which enables rights owners to release portions of equity from their music, providing greater flexibility to access future earnings while retaining majority ownership of their intellectual property.

The acquisition opportunity resulted from an existing long-term relationship that management had with the vendor, reflecting the importance of the team's long and respected track record in the music industry, which is built on relationships. It continues to exploit these carefully held networks and is actively seeking new opportunities that meet our investment criteria as we look to deploy our cash into proven income streams.

In August 2020 the Company raised GBP5.6 million of equity (net of costs), of which GBP5.4 million has been invested into the acquisition of eight portfolios of rights. These transactions have been completed at an attractive blended multiple of 9x with an 11% yield.

Alongside our core focus on royalties, the business plan for the Company's proprietary anti-privacy software platform investment, TCAT Ltd ("TCAT") continues to progress in line with expectations. Established in 2016 to automate the difficult and time-consuming task of detecting copyright infringement, TCAT operates across the major digital stores, including Apple, Spotify, Amazon Deezer and YouTube, and is currently being deployed across 178 territories.

The TCAT team are working with three major record labels globally with the expectation of entering into long term contracts.

A full board has been appointed, including CEO Nick Stewart, and TCAT now employs a team of 10 people plus two consultants. Nick Stewart is deploying his extensive experience of the global music market, royalty collection and music piracy to build the profile of TCAT and its ground-breaking A.I. software, which monitors millions of music tracks across the world, saving rights holders millions in unpaid or fraudulently claimed royalties.

The One Media Board together with the newly formed TCAT board has been active in seeking funding directly into the TCAT subsidiary. Currently that process is undergoing due diligence and we will report to the market when it is completed.

Market backdrop and outlook

The outlook for the music industry grows ever stronger, with technology advancements and positive developments creating a fairer and more efficient system for all of us who depend on royalty streams for income.

In June 2022, Goldman Sachs issued its 'Music in the Air' report into the global music industry, reiterating its confidence that music streaming will remain resilient in an economic downturn. It once again raised its global revenue forecasts, projecting a 24% increase in 2022 revenues across all sectors followed by 8% growth in 2023, driven by higher streaming revenues, revenues from emerging platforms and physical sales.

In July 2022, a legal ruling in the US paved the way for an increase in the headline royalty rate paid from streaming services in the US from 10.5% to 15.1%, which has been backdated to 2018. The new rates imposed by the Copyright Royalty Board (CRB) is the largest rate increase in the history of the CRB.

With the headline rate change, the streaming services are about to pay out arrears to publishers and songwriters/composers to cover the now official 15.1% CRB (2022) rate for the five years covered by the ruling on a prorated basis. The CRB has commenced negotiations for the next five-year period (2023 to 2027) on behalf of the composers and publishers and want to see a mechanical streaming royalty rate of 20%. The Company does not expect this to be a material payment.

Not only will this ruling have a positive impact on the Company's revenues, but it sets another welcome marker for the industry generally, in recognising the value of music and its creators as well as underlining the robust investment potential of music composition and publishing rights.

Against this positive backdrop we'd finally like to thank our shareholders for their ongoing support, and also pay tribute to the One Media team for their efforts on your behalf.

Claire Blunt

Chairman of One Media

Unaudited Consolidated Statement of Comprehensive Income

For the six months ended 30 April 2022

 
                                Unaudited   Unaudited             Audited 
                                 6 months    6 months           12 months 
                                    ended       ended    ended 31 October 
                                 30 April    30 April                2021 
                                     2022        2021 
                                      GBP         GBP                 GBP 
 
 Revenue                        2,381,784   2,102,848           4,389,581 
 
 Distribution charges           (526,466)   (529,501)         (1,107,127) 
 Royalty costs                  (232,036)   (212,125)           (435,386) 
 Other costs                     (26,155)    (31,436)            (66,542) 
                                _________   _________           _________ 
 Net revenue                    1,597,127   1,329,786           2,780,526 
 
 Amortisation of catalogues     (378,251)   (256,998)           (599,308) 
 Administration expenses        (611,342)   (555,026)         (1,040,706) 
 FOREX gains/(losses)              18,134    (35,564)            (64,554) 
                                _________   _________           _________ 
 Operating profit                 625,668     482,198           1,075,958 
 
 Share based payments            (30,228)    (30,125)            (77,178) 
 Finance costs                   (90,205)    (92,956)           (184,045) 
 Finance income                         -           -                   1 
                                _________   _________           _________ 
 
 Profit from continuing 
  activities                      505,235     359,117             814,736 
 
 Asset disposal                         -           -            (93,939) 
 
 Profit on ordinary 
  activities before 
  taxation                        505,235     359,117             720,797 
 
 Tax expense                     (90,031)    (61,780)           (176,222) 
                                _________   _________           _________ 
 Profit for period 
  attributable to equity 
  shareholders and total 
  comprehensive income 
  for the year                    415,204     297,337             544,575 
                                =========   =========           ========= 
 Basic earnings per 
  share                             0.19p       0.15p               0.24p 
                                =========   =========           ========= 
 

Unaudited Consolidated Statement of Financial Position

As at 30 April 2022

 
                                Unaudited    Unaudited      Audited 
                                 30 April     30 April   31 October 
                                     2022         2021         2021 
                                      GBP          GBP          GBP 
 Assets 
 Non-current assets 
 Intangible assets             14,562,132    9,403,844   13,484,077 
 Property, plant 
  and equipment                    23,486       86,849       44,007 
                                _________    _________    _________ 
                               14,585,618    9,490,693   13,528,084 
                                _________    _________    _________ 
 Current assets 
 Trade and other 
  receivables                   1,443,787    1,385,946    1,481,077 
 Cash and cash equivalents      2,138,294    6,373,525    2,565,813 
                                _________    _________    _________ 
 Total current assets           3,582,081    7,759,471    4,046,890 
                                _________    _________    _________ 
 Total assets                  18,167,699   17,250,164   17,574,974 
                                =========    =========    ========= 
 
 Liabilities 
 Current liabilities 
 
 Trade and other 
  payables                      1,055,961      821,704      937,622 
 Deferred tax                     137,512      117,356      132,830 
                                _________    _________    _________ 
                                1,193,473      939,060    1,070,452 
 
 Borrowings                     1,769,987    1,724,243    1,745,735 
                                _________    _________    _________ 
 
 Total liabilities              2,963,460    2,663,303    2,816,187 
                                _________    _________    _________ 
 Equity 
 
 Called up share 
  capital                       1,112,231    1,112,231    1,112,231 
 Share redemption 
  reserve                         239,546      239,546      239,546 
 Share premium account          9,484,577    9,484,577    9,484,577 
 Share based payment 
  reserve                         534,627      457,346      504,399 
 Retained earnings              3,833,258    3,293,161    3,418,054 
                                _________    _________    _________ 
 Total equity                  15,204,239   14,586,861   14,758,807 
                                _________    _________    _________ 
 
                                _________    _________    _________ 
 Total equity and 
  liabilities                  18,167,699   17,250,164   17,574,974 
                                =========    =========    ========= 
 
 
 

Unaudited Consolidated Statement of Changes in Equity

For the six months ended 30 April 2022

 
                        Share         Share       Share      Share    Retained        Total 
                      capital    redemption     premium      based    earnings       equity 
                                    reserve                payment 
                                                           reserve 
                          GBP           GBP         GBP        GBP         GBP          GBP 
 At 1 November 
  2020              1,109,731       239,546   9,473,327    427,221   2,995,824   14,245,649 
 Proceeds 
  from the 
  issue of 
  new shares            2,500             -      11,250          -           -       13,750 
 Profit for 
  the six months 
  to 
  30 April 
  2021                      -             -           -          -     297,337      297,337 
 Share based 
  payment charge            -             -           -     30,125           -       30,125 
                     ________     _________   _________   ________   _________    _________ 
 At 30 April 
  2021              1,112,231       239,546   9,484,577    457,346   3,293,161   14,586,861 
 Proceeds 
  from the 
  issue of 
  new shares                -             -           -          -           -            - 
 Dividends 
  paid                      -             -           -          -   (122,345)    (122,345) 
 Profit for 
  the six months 
  to 
  31 October 
  2021                      -             -           -          -     247,238      247,238 
 Share based 
  payment charge            -             -           -     47,053           -       47,053 
                     ________     _________   _________   ________   _________    _________ 
 At 31 October 
  2021              1,112,231       239,546   9,484,577    504,399   3,418,054   14,758,807 
 Proceeds 
  from the 
  issue of 
  new shares                -             -           -          -           -            - 
 Profit for 
  the six months 
  to 
  30 April 
  2021                      -             -           -          -     415,204      415,204 
 Share based 

  payment charge            -             -           -     30,228           -       30,228 
                     ________     _________   _________   ________   _________    _________ 
 Balance at 
  30 April 
  2022              1,112,231       239,546   9,484,577    534,627   3,833,258   15,204,239 
                     ========     =========   =========   ========   =========     ======== 
 

Unaudited Consolidated Cash Flow Statement

For the six months ended 30 April 2022

 
                                 Unaudited   Unaudited         Audited 
                                  6 months    6 months       12 months 
                                     ended       ended           ended 
                                  30 April    30 April      31 October 
                                      2022        2021            2021 
                                       GBP         GBP             GBP 
 Cash flows from operating 
  activities 
 
 Profit before taxation            529,487     386,118         720,798 
 Amortisation                      384,388     240,411         599,169 
 Depreciation                       24,840       7,552          50,509 
 Share based payments               30,228      30,125          77,178 
 Finance income                          -           -             (1) 
 Finance costs                      90,205      92,455         184,045 
 (Increase)/decrease in 
  receivables                        3,703   (252,240)       (313,783) 
 (Decrease)/increase in 
  payables                          30,031    (94,780)        (69,144) 
 Corporation tax paid                    -           -        (72,063) 
                                 _________   _________       _________ 
 Net cash inflow from 
  operating activities           1,092,882     409,641       1,176,708 
                                 _________   _________       _________ 
 
 Cash flows from investing 
  activities 
 
 Investment in copyrights 
  / licenses                   (1,050,897)   (303,733)     (4,356,814) 
 Net TCAT Investment             (411,548)   (456,362)       (842,273) 
 Investment in fixed assets        (4,319)     (3,141)         (3,257) 
 Finance income                          -           -               1 
                                 _________   _________       _________ 
 Net cash used in investing 
  activities                   (1,466,764)   (763,236)     (5,202,343) 
                                 _________   _________       _________ 
 
 Cash flow from financing 
  activities 
 
 Proceeds from the issue 
  of new shares                          -      13,750          13,750 
 Finance cost paid                (53,637)    (53,054)       (114,873) 
 Loan notes                              -           -          48,492 
 Dividend paid                           -           -       (122,345) 
                                 _________   _________       _________ 
 Net cash inflow from 
  financing activities            (53,637)    (39,304)       (174,976) 
                                 _________   _________       _________ 
 
 Net change in cash and 
  cash equivalents               (427,519)   (392,899)     (4,200,611) 
 Cash at the beginning 
  of the period                  2,565,813   6,766,424       6,766,424 
                                 _________   _________       _________ 
 Cash at end of the period       2,138,294   6,373,524       2,565,813 
                                 =========   =========       ========= 
 

Notes to the Interim Report

For the six months ended 30 April 2022

   1.   Nature of operations and general information 

One Media iP Group Plc and its subsidiaries' ("the Group") principal activities are the acquisition and licensing of audio-visual intellectual copyrights and publishing for distribution through the digital medium and to a lesser extent through traditional media outlets.

One Media iP Group Plc is the Group's ultimate parent company incorporated under the Companies Act in England and Wales. The address of One Media iP Group Plc registered office is 623 East Props Building, Goldfinger Avenue, Pinewood Road, Iver Heath, Buckinghamshire, SL0 0NH.

The financial information set out in this Interim Report does not constitute statutory accounts. The Group's statutory financial statements for the year ended 31 October 2021 are available from the Group's website. The auditor's report on those financial statements was unqualified.

   2.   Accounting Policies 

Basis of Preparation

These interim consolidated financial statements are for the six months ended 30 April 2022. They have been prepared following the recognition and measurement principles of IFRS. They do not include all the information required for full annual statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 October 2021.

This unaudited interim statement has not been subject to a review by the Group's auditors James Cowper Kreston.

Comparatives

The comparative periods represent the unaudited results for the six months period ended 30 April 2022 and the audited twelve months figures for the year ended 31 October 2021.

   3.   Earnings per share 

The calculation of the earnings per share is based on the profit for the financial period divided by the weighted average number of shares in issue during the period.

 
                              Unaudited        Unaudited       Audited 
 Basic earnings          6 months ended   6 months ended     12 months 
  per share               30 April 2022    30 April 2021         ended 
                                                            31 October 
                                                                  2021 
 
 Profit for period 
  attributable to 
  equity shareholders           415,204          297,337       544,575 
 Weighted average 
  number of shares 
  in issue at period 
  end                       222,446,249      192,069,005   222,446,249 
                              _________        _________     _________ 
 Basic earnings 
  per share                       0.19p            0.15p         0.24p 
                              =========        =========     ========= 
 

The diluted earnings per share would be lower than the basic profit per share as the exercise of warrants and options would be dilutive.

   4.   Share capital 
 
                                 Unaudited    Unaudited      Audited 
                                  30 April     30 April   31 October 
                                      2022         2021         2021 
 Group and company                     GBP          GBP          GBP 
 
 Authorised: 
 
 200,000,000 ordinary shares 
  of 0.5p each                   1,000,000    1,000,000    1,000,000 
                                ==========   ==========   ========== 
 
 Issued: 
 
 Ordinary shares of 0.5p 
  each 
 
 
 222,446,249 ordinary shares 
  of 0.5p each                   1,112,231    1,112,231    1,112,231 
                                ==========   ==========   ========== 
 
   5.   Interim statement 

Copies of this statement are available from the Group's registered Office at:

623 East Props Building, Goldfinger Avenue, Pinewood Road, Iver Heath, Buckinghamshire, SL0 0NH.

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as "believe", "could", "should" "envisage", "estimate", "intend", "may", "plan", "potentially", "expect", "will" or the negative of those, variations or comparable expressions, including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

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